Investors Should Look Past F5 Networks' Disappointing Results

Investors Should Look Past F5 Networks' Disappointing Results

F5 Networks, Inc. (NASDAQ: FFIV), which specializes in the secure delivery of applications for large enterprises, reported a disappointing June quarter. While non-GAAP earnings per share was in line with expectations, revenue of $517.8 million, representing 4.3% growth, fell short of analyst expectations by $7.85 million. 

That slowdown fed into analyst concerns that competition and cloud adoption could reduce demand for F5's core load-balancing products. However, I think the fears are somewhat overblown for a few reasons.

Analysts were quick to ask if F5's slowdown was due to increased competition, but management denied this, citing macroeconomic factors. Management specifically pointed to Europe, where large enterprises continue to feel the fallout from Brexit, especially in the financial sector, as well as the regulatory burdens of the General Data Protection Regulation. That has slowed large enterprises' decisions regarding data centers, where F5 sells its products. Furthermore, uncertainty regarding the U.S. and UK government's budget has slowed public sector spending as well.

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Source: Fool.com